Private Placements: Venture Capital

“Healthcare investment into companies grew significantly, reaching $8.6 billion in 2014. Biopharma companies had the major share of that total, at $6 billion – the highest level since SVB started tracking the data in 2005.”

“In the past two years, we have seen the emergence of non-VC investors, particularly hedge funds, providing “top-up” financing to IPO-ready companies prior to entering the market,” Jonathan Norris, Kristina Peralta, “Trends in Healthcare Investments and Exits 2015”

“My estimate, based on discussions with a few bankers who track crossover activity, and an appreciation of Corporate Venture Capital (CVC) contributions, is that only around 50% of the $6B invested in private biotech’s came from “conventional” venture investors (meaning independent venture firms backed by groups of LPs)”

Novel Drug Targets

Total Venture Funding of Drug R&A, 2004-2013

“Over the past decade, nearly 80% of venture capital for therapeutics went toward “novel drug R&D” rather than improvements on existing drugs. This trend is in contrast to the rise of “low technical risk” spec pharma investment model of the 2001-2007 period.”

Series A Funding By Drug R&A Type

“Initial rounds of funding (Series A’s) for novel drug R&D reached their highest levels in a decade in 2013. the importance of “high innovation quotient” investment thesis to gather initial venture funding is clearly on the rise.”

Early Stage

Series A Venture Funding By Stage of Lead Asset

“Most of the Series A funding of new startups has gone toward early-stage assets (drug discovery, preclinical, and Phase 1), and this has increased over the past five years. Further, the majority of the early-stage financings went to discovery/preclinical (~75%) vs. Phase 1.”

“On the early stage side, nearly one-third of all Series A funding comes from corporate venture capital (CVC) – and this has been increasing over time.”

Active Corporate Venture Capitalists

Business development, private investing, and M&A are moving “online” – while alternative finance started off as seed stage endeavor, more recently platforms have begun to emerge at different stages in the funding cycle, disrupting traditional institutions

Alternative finance is drawing more established issuers – Originally seen as a solution to the long-standing funding gap for early stage companies that appeared in the wake of the 2008 financial crisis, the ability for issuers to raise capital more quickly and at a lower cost than would otherwise be possible at traditional institutions